Strategizing for Sustainability: Examining the Dynamic Interplay of the Circular Economy, Green Technology Innovation, and Green Performance

Abstract Environmental challenges critically affect manufacturing firms which face numerous concerns regarding their sustainable operations. These operations aim to operationalize the dimensions of circular economy capabilities (CEC) and green technology innovation (GTI) to strengthen competitiveness in fragile environments. This research validates a holistic understanding of green performance by integrating theories and dimensions to identify effects that predict sustainable green performance. Drawing from the green dynamic capability view (GDCV), which is a contextual extension of the DCV and flexible systems management (FSM) paradigm, this study investigates how CEC and GTI predict green performance (GP). Survey data of 301 senior professionals from manufacturing firms acquired from a developing country, such as Bangladesh, were used. To assess the survey data, the study used a multimethodological approach using Necessary Condition Analysis (NCA) and fuzzy-set Qualitative Comparative Analysis (fsQCA) to investigate the suggested tie in the midst of the CEC and GTI on the GP. The findings reveal that all the antecedents of the circular economy are necessary conditions except absorptive capacity to predict green performance, as reported in the NCA. The fsQCA results show that combinations of CEC and GTI are sufficient conditions to predict high green performance. This research uses a unique combination of CEC and GTI to predict high GP via the supplementary method of fsQCA. Therefore, the findings should also motivate professionals of manufacturing firms to focus even more on the necessity effects of a single condition to predict GP and the asymmetric effects of combinations of CEC and GTI to produce multiple configurations to predict high green performance.